easy · Financial Accounting accounting-cycle-financial-statements
A company sells 1,000,000 of goods on credit. Historical data and current economic forecasts suggest a2%loss rate.
Under the matching principle, when is the20,000 bad debt expense recognized?
- Spread evenly over the following 12 months
- In the same period as the $1,000,000 revenue
- Only when a specific customer defaults
- When the cash for the $980,000 is collected
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